Posted: January 25, 2013
by: T. Scott Gilligan, NFDA general counsel
The FTC recently posted four Funeral Rule Advisory Opinions on its website. Three of the Opinions are new, while one, which was initially issued back in 2011 and which NFDA asked the staff to reconsider, has been reissued in a revised form. The three new Opinions do not break any new ground and reaffirm, for the most part, long-held interpretations of the Funeral Rule previously issued by NFDA.
A summary of the Opinions are as follows:
Opinion No. 12-1.
This Opinion, which is the only Funeral Rule Advisory Opinion issued by the FTC staff in 2012, clarifies which caskets must be listed on a funeral home's Casket Price List. Specifically, the question concerned whether a funeral home which wished to test market a casket to select consumers could leave the casket off of its Casket Price List.
The Opinion quoted the FTC's "Complying with the Funeral Rule" manual which holds that those caskets usually offered by the funeral home for sale that do not require special ordering must be listed on the Casket Price List. In this case, since the test market caskets were offered for sale and did not require special ordering, the Opinion concluded that they must be on the Casket Price List. Without this requirement, the Opinion stressed that funeral homes could limit the availability of less expensive caskets by offering them only to consumers with limited means.
What the Opinion did not address and which may be of some concern to funeral homes are caskets sold under preneed contracts. As the 1985 FTC Funeral Rule Compliance Guidelines recognized, if a funeral home has caskets in storage to fulfill existing preneed contracts, those caskets are not required to be listed on the Casket Price List since they are not currently offered for sale by the funeral home.
Opinion No. 13-1.
In this Opinion, the FTC staff addressed the issues of whether funeral homes may charge extra for handling obesity cases or using additional personnel for very large funeral services. In both cases, the Opinion found that these charges are permissible as long as they are listed on the General Price List and provide enough information so that consumers can determine when the additional fees would be imposed.
NFDA has previously advised funeral homes that additional fees for handling obesity cases when doing removals, embalming, or cremation are permissible under the Funeral Rule. We agree with the FTC staff's Opinion that the additional charges must be listed on the General Price List and must identify at what point they will be imposed. For example, with obesity cases, the funeral home should identify the precise weight limit at which the additional charges will be imposed. With additional personnel charges for large funerals, the General Price List should spell out under what circumstances the extra fees would be imposed.
Opinion No. 13-02.
This Opinion also concerned the issue of additional fees which some funeral homes charge for special services. In this case, the issue was whether funeral homes may charge additional fees to process assigned insurance policies or charge consumers any fees that the funeral home pays to third parties to process insurance claims. In both cases, the FTC Opinion concluded that as long as the consumers are given payment options and the options (together with any applicable fees) are explained on the General Price List, the fees are permissible under the Funeral Rule.
If funeral homes are providing payment options to consumers and imposing additional fees for different options, those fees should be disclosed on the General Price List. This would include the new option of imposing a surcharge on a consumer who pays with a credit card which will be permissible in 40 states starting January 27, 2013.
Opinion No. 11-1.
This Opinion, which was originally issued on December 21, 2011, addressed the issue of charging a separate fee for identification prior to cremation when state law does not require identification. The FTC staff advised in the original Opinion that a funeral home could not require the purchase of identification prior to final disposition unless a state law or a crematory requirement mandated the identification.
When the Opinion was initially made available to NFDA, NFDA immediately requested the FTC staff to reconsider the Opinion. First, we pointed out that the Opinion is wrong in concluding that identification is not a practical necessity. As we explained, every credible expert in the industry advises that a funeral home which fails to require identification of the remains prior to cremation is negligent and will be held liable if the failure to identify results in a wrongful cremation.
The original Opinion claimed that even if identification is a practical necessity to protect a funeral home from liability, there are three less expensive alternatives to an identification requirement which protect the funeral home from liability. The three alternatives suggested by the Staff Advisory Opinion consist of identification of a body by the family using a digital photograph taken by the funeral home, identification by the funeral director using a family photo provided by the family, or the execution of a waiver by the family.
NFDA pointed out to the FTC staff that identification by a digital photograph is an acceptable alternative to in-person identification, but also involves costs which a funeral home is entitled to collect. We further pointed out that having a funeral director make the identification using a family photograph is not a suitable alternative since many families may not have a photograph or the photograph may be so out of date that it is of little use. In addition, having the funeral director identify the body from a family photograph does not relieve the funeral home from liability if the identification is incorrect. NFDA also demonstrated that a waiver offers absolutely no protection since the family that signs the waiver will not be the family that sues the funeral home in the case of wrongful cremation.
While the reissued Opinion No. 11-1 acknowledged NFDA's arguments, it did not address or refute them. However, the revised Opinion does contain a new footnote which, as explained below, allows all funeral homes to include identification as part of their direct cremation or immediate burial charges. Therefore, although the revised Opinion employs faulty logic to arrive at an acceptable accommodation, it does recognize that funeral homes may require identification of the body as part of direct cremation and immediate burial.
In most respects, the revised Opinion suffers from the same flaws as in the original Opinion. In that regard, consider the following:
As noted above, the revised Opinion now includes a new footnote #12 which states that funeral homes may include identification in the basic services fee. Therefore, by requiring identification as part of its basic services fee, a funeral home may include identification in its direct cremation and immediate burial charges.
Based upon the content of revised Opinion Letter No. 11-01, NFDA would advise funeral homes as follows:
NFDA members with questions regarding the FTC staff Opinions may contact Scott Gilligan at 513-871-6332.
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